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Preorders can be a powerful tool for boosting retail and online sales revenue. A study by Square and Afterpay found that customers spent 21% more per order on preorders than they did on regular product orders through Square Online.
It’s no surprise that preordering is a top sales strategy for some of the most popular brands in the world. If you are considering preorders for your business, here’s everything you need to know.
What is preordering?
Preordering refers to purchasing a product or service before it is officially released or available for sale to the general public. It allows customers to reserve and secure their desired item in advance, often with a deposit or full payment, ensuring they will receive it as soon as it becomes available.
By allowing customers to reserve and pay for products before they are officially released or available, your business can generate excitement and anticipation while securing sales in advance.
What are the benefits of preordering for your business?
Cash flow improvement
Preorders allow you to collect payment from customers before the product is released or shipped. This can help improve your cash flow by providing an influx of revenue up front, which can be especially beneficial if your business requires significant investment in production or inventory.
Market demand validation
Launching a new product with preorders helps you gauge market demand before investing heavily in production. If you receive strong preorder numbers, it indicates sufficient interest in your product, giving you the confidence to proceed with large-scale production.
Anticipation and exclusivity
Preorders create excitement among customers as they get the chance to be among the first to own a highly anticipated product. By offering exclusive access or limited quantities during the preorder phase, you can generate even more interest and anticipation.
Inventory management
By offering preorders, you can better estimate customer demand and adjust your inventory accordingly. This helps minimize overstocking or understocking issues, reducing potential losses and maximizing profitability.
Customer engagement
Preorders offer an opportunity for businesses to engage directly with customers throughout the process — from announcement to release date — building anticipation, marketing opportunities, and customer loyalty along the way.
How to set up and manage preordering
1. Nail your preorder offer.
Customers will pay all or a part of the purchase price up front, so they need strong incentives to take the bait. This could be exclusive bonuses or perks or bundling with products that are already popular, helping to add to the hype and customer demand.
Think through how you want to receive payments. Will customers pay full price upfront? Or will you accept payments through buy now, pay later (BNPL)? BNPL is particularly popular among Gen Z shoppers and may be worth considering if you cater to this customer group. With Square, you can easily enable BNPL payments from Afterpay both for in-store and online sales.
2. Set up your preorder product page.
Once you’ve figured out your offer, setting up your preorder product page is the next step. With Square Online, you can easily set up and sell items as preorder items. You can specify when items will become available, fulfillment hours, and a preorder cutoff date. Be sure to write a clear and effective product description so customers know exactly what to expect. Test the page to ensure all features work as expected and customers will have a smooth shopping experience.
3. Promote the preorder.
An effective promotion campaign is crucial for your preorder sales success. Start the promotion process early, even before you officially launch the preorder. For example, you can tease your audience with sneak peeks, behind-the-scenes content, or product previews. Use social media, your website, email marketing, and text campaigns to build anticipation. With Square Marketing, you can send personalized one-time or automated email and text campaigns to promote preorders.
Consider offering early-bird discounts or exclusive bonuses for customers who preorder. Limited-time offers create a sense of urgency and motivate potential customers to take action sooner rather than later.
4. Stop preorders on the due date.
If you announced that preorders will end on a specific date, be sure to follow through on that promise. Sticking to your preorder deadline demonstrates reliability and transparency to your customers. This builds trust, safeguards your reputation, and fosters a sense of credibility within your target audience.
In contrast, extending preorder deadlines can hurt your sales in the future. Customers who believe you are merely creating artificial scarcity around your preorder may delay their purchase decisions, thinking they can always buy later. This delay can result in lost sales.
5. Deliver products on the launch date.
Finally, once the product becomes available, deliver items to customers as promised. Communication is key when selling preorders. If you anticipate production or delivery delays, be sure to inform your customers. This can help manage expectations and reduce any potential frustration.
Delays in product delivery can lead to negative feedback and online reviews, which can harm your brand’s reputation and deter potential customers from making future purchases. On the flip side, timely delivery can generate positive reviews and word-of-mouth recommendations.
6. Take stock of what worked and what didn’t
Assessing the performance of your preorder campaign helps you improve future campaigns. For example, if you are a Square customer, you can glean insight from sales data, email statistics, and other reports available via Square Analytics. You can see when your preorders sold the most and which email or text campaigns drove the most sales.
You can also collect direct feedback from customers. For example, you can send surveys to preorder customers to gather their opinions on the process, product quality, and overall experience. Monitor online reviews and social media mentions related to your product. Address concerns or issues promptly and use the feedback to enhance future offerings.
Get started with preordering
Preorders represent a potent strategy to boost revenue and engage and excite your customers. They offer a unique opportunity to build anticipation, secure sales, and refine your products and marketing efforts.
When executed effectively, preorders can be a win-win strategy for both customers and businesses. By continuously analyzing and adapting your strategy, you’ll be better equipped to run successful preorder campaigns, boost revenue, and meet the evolving needs of your customers. Learn more about managing preorders with Square Online.
